IT and Business Insights for SMB Solution Providers

Demise of the 3-Year PC Refresh Cycle

System refresh sales are booming, thanks in part to an economic upswing. Enjoy it now, though, because the next refresh is four to six years away. By Hank Hogan

The three-year hardware refresh cycle may be dead. System lifetimes now look to be perhaps 33 percent longer for laptops and maybe double the old three-year norm for desktops. For system builders, this could herald a permanently changed landscape. But before things settle down, a last hurrah is under way.

“I plan to refresh 50 percent of the customer PCs we manage this year, as the timing is right,” says David Stinner, president of Buffalo, N.Y.-based managed service provider and system builder US itek Group. “The recession is past, head counts are coming back up, and the touchscreens are here, so we are ready for the Metro UI of Windows 8.”

Another system builder, Proactive Technologies of Dallas, is also seeing more refresh activity, says President Kenny Kremm. The company builds servers, storage systems, and application servers for the printing and graphic arts industry. Here, more computing power directly translates to greater throughput due to faster image rasterization. Previous Intel chips might have taken an hour to handle a job, but that will improve dramatically with the latest generation, Kremm says. “I’ll now have it down to about 10 minutes. That gives me an easy calculation of ROI to show my customers.”

Of course, greater throughput is only important if systems aren’t sitting idle. Part of the reason for the current refresh activity is that system builders’ customers have enough work so that increased productivity is worth the cost. It no longer makes economic sense to nurse old servers and systems along.

Goodbye Windows XP

Other forces pushing for hardware refresh right now include the demise—finally—of Windows XP. The availability of a popular and worthy replacement is helping to convince users to upgrade.

“Windows 7 is actually a great growth driver for the PC refresh,” says Mikako Kitagawa, a principal analyst with Gartner Inc. “It’s been growing and it’s going to grow at least another one year or so.” Kitagawa adds that the last peak for PC hardware refresh should have happened in 2009 but didn’t, courtesy of the worldwide economic downturn and an unpopular OS. Consequently, companies are now catching up, leading to a refresh boom.

However, the expectation is that after the current cycle is over, things will slow down. Kitagawa thinks the refresh cycle for professional laptops will run four years, while desktops may be upgraded only every six years. Consumer refresh cycles will run even longer than that.

Part of the reason for this is the industry’s success at solving technological problems. Motherboards, power supplies, and disk drives last longer, so there’s a diminished need for a refresh due to failure. There’s also less of a reason for a preventive refresh.

Also, faster processors and greater bandwidth mean that the bottleneck is often no longer the system. Hence, there’s not as much of a payoff from upgrading. What’s more, operating systems are more stable and capable, making it less imperative to modernize.

Mobile Devices and the PC Refresh Cycle

There’s also an impact from alternative form factors, such as tablets and smartphones, says Michael Suby, Stratecast vice president of research at research firm Frost & Sullivan. These devices may slow the PC hardware refresh cycle even if they cannot directly replace a PC in a given application, because of the choices they force. “IT organizations have fixed budgets, and they’re being called on to invest money in data centers, invest money in applications, and invest money in handheld devices,” says Suby.

There are some factors working against this looming slowdown. For instance, the advent of touchscreens and new laptop categories could help, provided a business case can be made for them. That may come, perhaps, with the arrival of Intel-backed ultrabooks.

But no matter what the future holds, Proactive’s Kremm notes the current activity spike isn’t without risk for system builders. As he says, “My only concern is, can the factories put out the number of processors we’re going to need to meet this refresh demand?”

About the Author